The Elevator Building was built in 1900 near the east Detroit riverfront. It sold Monday to a New York City investor for $2.125 million.

The 28,000-square-foot Elevator Building sold for $2.125 million.

The Elevator Building near the east Detroit riverfront has sold to a New York City investor who plans upgrades.

Jean-Michel "Mitch" Wasterlain closed on the deal for the 28,000-square-foot building at 1938 Franklin St. on Monday, according to Peter Jankowski, vice president of brokerage services for Farmington Hills-based Friedman Real Estate LLC who represented the previous owner, the Lewarchik family, as well as the new owner.

Wasterlain purchased the building using the entity 1938 Franklin Holdings LLC. He is the co-founder and CEO of New York-based real estate investment fund manager CapitalFund Realty Inc. and runs Next Cities Investments LLC; the latter will focus on real estate investment in Detroit and possibly other cities, Wasterlain said.

"We see a huge amount of opportunity there and we see opportunities to help transform neighborhoods such as the riverfront," he told Crain's. "We also see a real need in the city for the type of space that already exists in the Elevator Building: creative office space, loft-type space."

Work such as roof improvements and window replacement will begin soon and take place over the next six months, said Wasterlain, who is a former president and CEO of ORIX Capital Markets LLC in Dallas and chief investment officer of NorthStar Realty Finance Corp. He declined to disclose the capital expenditure budget.

The Lewarchiks purchased the building in 2007 for $298,000, or about $10.64 per square foot, according to city property records. It was listed for $2.6 million, or $92.86 per square foot, the Friedman listing says. It sold Monday for $2.125 million, or $75.89 per square foot.

Southfield-based Signature Associates Inc. will manage the building while the Detroit office of Toronto-based Avison Young will be responsible for leasing. Southfield-based Bernard Financial Group arranged financing on the deal, Wasterlain said.

It is 97 percent occupied with a rent of $17.50 per square foot.

"The mix of tenants there is everything from some great nonprofits to video production companies, all kinds of entrepreneurial businesses that are really fueling the revival of Detroit," Wasterlain said, adding that he is looking at other investment opportunities in areas outside of the downtown core such as Midtown and Corktown.

The Lewarchiks have said that the building, which was named for the Detroit Elevator Co. that had owned it for decades, at one point was a bootlegging hub for the notorious Purple Gang. It also had been a Studebaker factory.

The previous owners had originally planned to turn it into condominiums but scrapped those plans amid the economic recession. Instead they renovated it as office space, leasing it to a handful of tenants around 2010, Crain's reported at the time.

It sits immediately east of the $65 million first phase of the Orleans Landing apartments and retail development and the Dequindre Cut bike and walking trail.

Also nearby is the Stone Soap Building, which is slated for a $27 million renovation into apartments, condominiums, retail and office space to the west. That project by Detroit-based Banyan Investments LLC, led by Aamir Farooqi and Scott Ord, was announced a year ago.